[Part II] Wisdom and Wealth: Inside Buffett’s Investment Playbook and Charlie Munger’s Influence

As Warren Buffett steps down as CEO of Berkshire Hathaway, it’s not just the conclusion of an era in corporate leadership – it’s also an opportunity to reflect on the principles that made him a giant in the world of investing.

Warren Buffett and Charlie Munger—partners in long-term thinking. I Illustrator: ASK

At the heart of his success lies a disciplined, values-driven approach to business, honed over decades and deeply influenced by his friend and partner, Charlie Munger.

This second installment of our three-part series explores the architecture of Buffett’s investing style and the transformative wisdom Munger brought to Berkshire.

The Essence of Value Investing

Buffett’s investment philosophy is grounded in the teachings of Benjamin Graham: buy undervalued businesses with a margin of safety and hold them for the long term.

But Buffett refined that approach over the years, placing greater emphasis on the quality of the business itself.

Rather than just buying cheap companies, Buffett sought those with durable competitive advantages — what he and Munger famously referred to as “moats.” These are businesses with strong brands, loyal customers, consistent cash flow, and smart, ethical management.

He also practiced what he preached: buying companies he understood and believed in. This “circle of competence” helped him avoid speculative or faddish investments.

Whether in consumer goods, insurance, or railroads, Buffett gravitated toward simplicity, predictability, and high returns on equity.

Charlie Munger’s Influence: Quality Over Quantity

It was Charlie Munger who nudged Buffett beyond Graham-style “cigar butt” investing. Munger convinced him that it’s better to buy a great company at a fair price than a mediocre company at a bargain.

This philosophical pivot led to some of Berkshire’s most legendary investments — from Coca-Cola to See’s Candies — and changed Buffett’s mindset from short-term gains to long-term compounding.

Munger also introduced a multidisciplinary decision-making framework using mental models drawn from psychology, physics, economics, and beyond.

This latticework of mental models became a cornerstone of how Berkshire evaluated opportunities, allowing for deeper, more rational analysis and more thoughtful decisions.

Iconic Investments that Built Berkshire

Buffett’s portfolio reads like a hall of fame for American capitalism. His $1.3 billion investment in Coca-Cola in the late 1980s, for instance, has yielded more than $25 billion and continues to pay Berkshire over $700 million annually in dividends.

Berkshire’s stake in American Express, forged during times of crisis, proved equally fruitful and enduring.

GEICO, See’s Candies, Apple, Bank of America, and BNSF Railway are other standout investments that showcase Buffett’s knack for identifying strong, scalable businesses and holding them through economic cycles.

In each case, the companies had characteristics Buffett valued: strong management, pricing power, and lasting relevance.

Shareholder Communication and Transparency

Buffett’s candid annual letters to shareholders have become required reading for investors globally. Eschewing corporate jargon, he explains complex financial concepts with clarity, humor, and a deep sense of integrity.

This culture of transparency is part of why Berkshire has earned such enduring trust among shareholders.

Buffett and Munger’s hours-long Q&A sessions at Berkshire’s annual meetings were masterclasses in investment thinking, and a living example of how humility and honesty can drive business success.

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In Part 3 of our series, we explore Buffett’s philanthropic commitments, the transition to Greg Abel, and the enduring legacy of one of the most remarkable business figures of our time.